IRA Disbursement at Death

Submitted by RALEIGH KRAFT on Thu, 2021-09-16 12:56

A deceased individual’s Revocable Living Trust has been named as primary beneficiary on an IRA where the individual has been taking an RMD. The Trust stipulates that all assets should be held in Trust for an individual with the income being distributed at least annually until her passing at which time the principal should be distributed to a charity.

In this scenario, would the IRA become a Trust IRA with the ‘income’ being distributed to the beneficiary for 10 years, at which time the balance would be distributed in full to the charity?



Submitted by Norman Cook on Thu, 2021-09-16 13:08

I am no expert but I think because the charity is not a person the 5 year rule will apply

Submitted by Alan - IRA critic on Thu, 2021-09-16 13:41

If the trust qualifies for look through treatment, and all IRA distributions including RMDs must be passed through to the beneficiary (conduit trust), RMDs to the trust would fall under the 10 year rule unless the trust conduit beneficiary is an EDB (eligible designated beneficiary). In that case, the RMDs could be stretched based on that beneficiary’s life expectancy.
If the trust fails qualification, the 5 year rule applies if the owner passed prior to RBD, and that remaining LE of the owner would apply if they passed on or after the RBD.

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